It's not an actual disease but a mixture of multiple STD's and infection, found this out when I showed one of the nurses at my old company and she just loved the picture and actually started using it for some of her classes....
Just for interest sake, I checked out the Urban Dictionary and found the following....
http://www.urbandictionary.com/define.php?term=blue+waffle
Blue Waffle
It appears to be an STI/STD on and in the vaginal region. This disease/infection is fictional and overly exaggerated vaginal infection (vaginitis). Images of the disease popped up on the internet on 03/18/10. The image created false concerns and misled people on the subject of vaginitis. No medical professional has provided proof for the existence of this disease/infection. The images of the disease have not yet been hosted by any medical site (legitimate). The individuals who allegedly had this ailment have not come out publicly. Which means the images were fabricated in photoshop. The images mislead uninformed, young, and naive members of the population; causing some to be too scared to engage in sexual activity. If you're 30+ and believe in this hoax...tie your tubes or get your self snipped.
The actual condition (vaginitis) causes; excessive itching, inflammation abnormal discharge, a burning sensation in the vulva. A women gets infected with vaginitis due to stress, poor diet, douching, unprotected sex, spermicidal lubricant, insufficient lubrication during intercourse, using unsanitary/unclean instruments for masturbation, or switching sexual partners within a twelve month period. This condition usually clears on its own, but antibiotics can be obtained to control the bacterial growth. It does not lead to anything resembling the fabled 'blue waffle'.
John: "Oh ***************** did you hear?!"
Andrea: "What?"
John: "Suzie has blue waffle! She's a total slut!"
Andrea: "Or you're an idiot... She had vaginitis from douching you stupid twat. And besides it doesn't exist in any LEGIT medical publication."
John: "How would you know?!"
Andrea: "I actually graduated med school."